"Yes, that's the essence of a market economy, Stephen," explained Johnson, who frequently provides analysis of the financial markets for the Huffington Post. The MIT professor was on the program to explain too-big-to-fail banks and the recent financial crisis. Colbert responded with a series of ridiculous arguments -- somewhat reminiscent of the arguments made by bankers.

"If people have get out of jail free cards, they're going to go off and do crazy things," Johnson continued. "When the time comes for a reckoning, there's no reckoning! There's no bankruptcy. They get to go out and take the same sort of reckless risks again in financial markets."